How does China's Winter Heating policy impact corporate sustainable development performance?

The China's Winter Heating policy plays a crucial role in China's regional environmental regulatory framework, particularly concerning the challenge of atmospheric pollution. This study investigates the impact of this policy on corporate sustainable development performance in the "2 + 26" cities of the Beijing, Tianjin and Hebei region (BTH2+26) at the micro-level. It employs a dual perspective focusing on emission reduction and efficiency enhancement (i.e., sustainable development), utilizing a DID model based on the policy shock from the first implementation of the China's Winter Heating policy in 2017. The findings indicate that this policy not only effectively promotes pollution reduction among heavy-polluting companies, thereby enhancing their environmental performance, but also improves their financial performance. Robustness tests confirm the significance of these results. Mechanism analysis reveals that the policy's facilitative effect on heavy-polluting companies is mediated through promoting green innovation and easing financing constraints, with the innovation investment being the main channel to promote the corporate environmental performance. Heterogeneity analysis shows differential impacts across company nature and industry attributes, highlighting the policy's varied effects on environmental performance and financial performance across sectors. This research contributes empirical evidence and policy insights into enhancing sustainable development performance among heavy-polluting companies under the China's Winter Heating policy framework.